By Lawal Nasir
Tunde Odesola is a man of anecdotes and analogies, making it easy for him to pass his salient messages to his audience. His article with the title “Stop, CBN! The baby is in the bathwater”, which appeared in his Punch newspaper column of July 31, makes for engaging reading. But this time around, beneath the anecdotes and analogies lies a fundamental lack of appreciation of the mandate of the Central Bank of Nigeria (CBN) and why the July 24, 2026 circular on advertising breaches was both timely and necessary.
The CBN is a regulator whose core duty under the CBN Act and the Banks and Other Financial Institutions Act 2020 (BOFIA 2020) is to protect depositors, ensure market discipline, and maintain financial system stability. That duty includes stopping practices that mislead the public and put depositors’ hard earned money on the line, even when those practices come wrapped in glossy promos.
Mr. Odesola, in faulting CBN’s stated penalty for breaches, asks if there are “two sets of advertising laws” because banks got approvals from the Advertising Regulatory Council of Nigeria (ARCON) and the Federal Competition and Consumer Protection Commission (FCCPC). The answer is an emphatic no! There is one law for advertising, and another for banking conduct, and I will explain.
ARCON regulates advertising, advertisements, and marketing communications in Nigeria, including aesthetics and facts. FCCPC, in the other hand, promotes fair market competition and safeguard consumer rights in Nigeria. The CBN regulates how financial products are marketed because misleading bank promotions directly affect financial inclusion, savings behavior, and systemic trust, all of which can negatively impact the public’s confidence in Nigeria’s financial institutions.
For instance, a promo promising “Win N10 million if you maintain N5,000” without clearly stating odds, eligibility, and tax implications is not just an advertising issue. It is a banking conduct issue. Section 95(f) and (g) of BOFIA 2020 specifically empowers the CBN to sanction banks for “unsafe or unsound practices” and for conduct that harms consumers. That is the legal basis cited in the circular.
The claim that the CBN gave “no room for feedback” ignores the timeline. The circular issued on November 27, 2025 was the first warning. Banks were given enough time to withdraw non-compliant materials. The July 24, 2026 circular is an enforcement notice after a review showed “continued circulation” of offending advertisements.
Regulatory forbearance has a limit and we all love to accuse leaders of lack of political will to enforce the law and check impunity. If infractions persist eight months after a directive, the regulator must act. The fines — N250m to N500m — were calibrated to “nature, severity and persistence” as stated, not arbitrarily imposed. Banks also retain the right to appeal through existing CBN administrative channels.
The “liquidity risk” argument doesn’t hold water, like Nigerians will say. Yes, direct deductions from Cash Reserve Ratio (CRR) can affect liquidity. But that is precisely the point of deterrence. If penalties were small or payable over five years, compliance would remain optional.
More importantly, the CBN is not targeting solvency. The amounts in question, while running into billions industry-wide, represent a fraction of the over N30 trillion in total banking sector deposits. A one-off sanction will not break a well-capitalized bank. What will break trust is allowing misleading promos to continue until a customer loses life savings chasing an “unwinnable” prize.
The CBN’s mandate is to prevent harm before it becomes a crisis. Waiting for “evidence of customer loss or financial instability” is like waiting for a building to collapse before enforcing building codes.
Again, Odesola concedes that “non-compliant institutions” gain “an unfair advantage.” That is the heart of the matter. Banks that followed the rules spent money on compliant ads and clear Terms and Conditions (T&Cs). Banks that cut corners attracted more deposits with misleading promises. Without sanctions, we reward recklessness and punish prudence. That is the opposite of “protection and justice.”
Collaboration is no doubt good, but it must not be lead to the absence of enforcement. The CBN has engaged the Bankers’ Committee, Chartered Institute of Bankers, and ARCON repeatedly on advertising standards. The July circular came after that engagement failed to produce compliance.
An “organic solution” cannot mean indefinite dialogue while infractions continue. Regulation sometimes requires the “flaming sword” Mr. Odesola cited in his piece. “Archangel Michael did not negotiate with corruption — he drove it out”.
Therefore, just like Mr Odesola noted in his piece, CBN Governor Olayemi Cardoso boasts of decades of experience in the banking sector. After initiating reforms that are beginning to bear fruits, the last thing Mr Cardoso will do is to destroy the banking sector. What the apex bank is doing is simply protecting the banking sector from reputational risk and consumer backlash. If banks feel the fines are excessive, the proper channel is appeal and dialogue, not public appeals to emotion. They must also understand that respecting the law is always cheaper than breaking it.
To borrow from Mr Odesola’s analogy, the “baby” here is public confidence in the banking system and the “bathwater” is misleading advertising. The CBN is right to throw out the dirty water, lest it suffocates the baby to death. Nigerians deserve banks that compete on service and rates, not on who can promise the biggest prize with the smallest print.
Nasir is based in Abuja
